Altering the Administration of India's Nuclear Policy
India is embarking on a significant overhaul of its civil nuclear sector with a series of reforms aimed at attracting foreign investment, de-risking suppliers, and fostering domestic manufacturing. The reforms, which include changes to the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act, 1962, are designed to bring India's liability rules in line with international standards and open the sector to private participation.
One of the key proposed changes is the dilution of Section 17(b) of the CLNDA. Currently, this section allows the nuclear operator to seek legal recourse against suppliers if a nuclear incident results from defective supplies or substandard services. The clause is broader than in most international nuclear liability laws and has been a deterrent for foreign suppliers due to the potentially unlimited and open-ended liability. The proposed amendment seeks to bring Section 17(b) in line with global norms, narrowing supplier liability and thereby reducing the risk perceived by foreign vendors.
Another significant change is the clarification of the definition of ‘supplier’. At present, the definition is broad, covering not only principal suppliers but also sub-suppliers. This creates concerns among smaller Indian vendors who fear unlimited liability under the current wording. The amendment will seek to define and limit the scope of ‘supplier’ liability, possibly excluding smaller sub-vendors unless explicitly mentioned in contracts, to protect domestic manufacturers and reassure foreign companies.
Discussions also include setting monetary caps on the liability of suppliers, potentially pegged to the original contract value, and including a time limit for liability exposure. This is meant to provide certainty and limit supplier risk, a critical factor in attracting foreign investments and technology transfers.
The reforms also aim to open up the sector to private sector participation. Amendments to the Atomic Energy Act would enable Indian private companies to build and operate nuclear reactors, a shift from the long-standing government monopoly on civil nuclear power generation. This aims to boost private and foreign investments and accelerate nuclear capacity expansion from the current 8 GW to an ambitious 100 GW by 2047.
The Atomic Energy Regulatory Board (AERB) will continue to oversee all nuclear projects, ensuring safety and proper contractual safeguards, providing confidence both to investors and the public.
To further strengthen regulatory capacity, the reform aims to create an independent Nuclear Safety Commission, recruit 500 domain experts over five years, and mandate digital twin simulations for licensing.
The reform also seeks to spur domestic manufacturing by declaring Nuclear Manufacturing Clusters under the Production-Linked Incentive scheme and offering customs-duty waivers for zero-defect export-grade components.
The proposed reforms are driven by the need for reliable, low-carbon baseload to complement variable renewables and the transfer of SMR-300 technology to Indian partners. The reforms aim to fast-track the Prototype Fast Breeder Reactor and complete a pilot metallic fuel reprocessing plant by 2030.
In conclusion, these amendments reflect India’s ambition to revive its civil nuclear sector, attract technology and investment from global players, and create a more balanced liability framework that reduces risks for suppliers while maintaining a robust legal structure for nuclear damage compensation.
- The proposed changes in the Civil Liability for Nuclear Damage Act (CLNDA) aim to align Section 17(b) with global norms, reducing the potential liability of suppliers and encouraging foreign technology transfers.
- To address concerns among smaller Indian vendors, the amendment seeks to define and limit the scope of 'supplier' liability, possibly excluding smaller sub-vendors from unlimited liability, unless explicitly mentioned in contracts.
- In an effort to cultivate private sector participation, the reforms intend to allow Indian private companies to build and operate nuclear reactors, a shift from the government's monopoly, which is expected to boost investments and expand nuclear capacity to 100 GW by 2047.
